LANSING, Mich., Sept. 25, 2013 /PRNewswire-USNewswire/ -- Approval of a new market rate investment fund created by the Michigan State Housing Development Authority (MSHDA) clears the way for new housing, real estate and construction projects in the state and is expected to give a lift to industries vital to the state's continued economic turnaround, MSHDA Executive Director Scott Woosley said today.
MSHDA board members gave final approval to the Michigan Mezzanine Investment Fund after Gov. Rick Snyder signed Senate Bill 347 on Tuesday into Public Act 116 of 2013. The moves give the green light to MSHDA's plan to create the Fund and attract outside capital to help fill the funding gap for commercial mixed-use and multifamily residential development in the state.
Snyder said the Fund is a critical part of the state's turnaround.
"The Michigan Mezzanine Fund will not only help fill a funding gap, but it will also boost the housing, real estate and construction industries in our state," Snyder said. "This is an important part of our plan to revitalize Michigan's urban cores."
Woosley said the Michigan Mezzanine Investment Fund is further proof that Michigan is once again an investible state.
"It's time for investors and developers to see our state as a great place to do business and create jobs," Woosley said. "This will help propel projects forward, promote job creation and economic development. The Fund also will diversify MSHDA's revenue streams, which means we will be able to free up more money for investment in affordable housing for our state's low-to-moderate income residents."
MSHDA will serve as general partner of the Fund, which will be seeded with $25 million (in non-taxpayer dollars). The Fund will leverage that money with $75-$100 million in private investment. Money will then be used to fill the gap between the equity a developer can bring to a project and the amount banks are willing to lend on a development.
Sen. Mark C. Jansen, R-Gaines, who sponsored S.B. 347, said he is proud to have been a part of a process that will aid in the state's resurgence.
"We have now added a tool for MSHDA to assist in the recovery of some of our largest struggling communities. This will prime the pump for more private investment to expedite the recovery," Jansen said.
MSHDA Board Chairman Tom Saxton lauded Woosley and his staff for coming up with a creative solution to a challenge that's been facing Michigan for years.
"This fund shows MSHDA's commitment to the industry, our state and its investors," Saxton said. "With more than 40 years of underwriting experience in multifamily housing, with oversight of a bond portfolio in excess of $1.5 billion and more than 550 multifamily developments under asset management, I am confident the MSHDA team has the expertise to make this new venture a success."
Alan Kiriluk, founder and chairman of KIRCO, one of the Midwest's leading real estate organizations with its main office in Troy, agreed and called the Fund a smart value for Michigan.
"In my profession, I work hard to build real estate value every day, and I can say with 100 percent certainty that this is the right plan, the right product, at the right time," Kiriluk said of the Fund. I applaud MSHDA for recognizing an impediment to development in Michigan and coming up with an excellent plan to fix it.
"Over the years, I have had the opportunity to work with different agencies on a variety of development issues, and I can tell you that MSHDA has been a leader in its understanding of the market and has a track record of making sound investments and money management."
The Michigan State Housing Development Authority (MSHDA) provides financial and technical assistance through public and private partnerships to create and preserve decent, affordable housing for low- and moderate-income residents and to engage in community economic development activities to revitalize urban and rural communities.*
*MSHDA's loans and operating expenses are financed through the sale of tax-exempt and taxable bonds as well as notes to private investors, not from state tax revenues. Proceeds are loaned at below-market interest rates to developers of rental housing, and help fund mortgages and home improvement loans. MSHDA also administers several federal housing programs. For more information, visit www.michigan.gov/mshda.
SOURCE Michigan State Housing Development Authority